GAITHERSBURG, MD – The European Bank for Reconstruction and Development has agreed to provide a five-year loan of 10 billion tenge (US$54.7 million) to Kazakhstan’s Bank CentreCredit for on-lending to micro, small and medium-sized businesses in the country, the EBRD reported on Dec. 23. At least 60 percent of the loan will be earmarked for businesses outside the country’s two main cities, Astana and Almaty.
Bank CentreCredit (BCC) is Kazakhstan’s sixth largest bank, with a network of 20 branches, and works with micro, small and medium-sized businesses (MSMEs) regularly. The loan is intended to help improve access to financing by MSMEs outside the country’s urban centres. The loan will be the first action under the EBRD’s new $200 million Kazakhstan MSME Framework, which intends to increase access to medium-term local currency funding for MSMEs in the country.
The loan will be guaranteed by the Damu Entrepreneurship Development Fund and accompanied by a technical assistance programme to build BCC’s internal capacities in the MSME sector. Funds will be channelled through local commercial banks, microfinance organisations and leasing companies that focus on projects in rural areas,while technical assistance tailored to each partner financial institution will be provided as part of the package.
At the loan announcement on Dec. 23, BCC CEO Vladislav Lee said the loan would strengthen the bank’s position in the small business sector.
“The Kazakhstan MSME Framework will build on the extensive work the bank has done over a number of years in the local MSME sector,” said Mike Taylor, EBRD director for financial institutions for Kazakhstan, the Caucasus and Mongolia, announcing the loan. “Our work will focus on the promotion of finance in rural areas, on local currency lending and on technical cooperation programmes to help rebuild institutional capacity in MSME lending. Bank CentreCredit is a long-standing partner of the EBRD with a historical focus and expertise in the MSME area. We are pleased to launch our first project under the new framework with them.”
Lyazzat Ibragimova, chair of the Damu Fund, said that Damu’s participation as guarantor marked a new stage in the fund’s history and indicated both the fund’s professional development and the EBRD’s trust in the institution.
“Development of the MSME segment and continued support to the local financial sector are the top priorities for the EBRD in Kazakhstan. We not only provide financing but are engaged in an active dialogue with the government of Kazakhstan, Damu, the National Bank and other stakeholders,” Janet Heckman, EBRD director for Kazakhstan, said.
Since the beginning of its operations in Kazakhstan in the early 1990s, the EBRD has invested over $4.8 billion in the country’s economy, with more than half of the total supporting projects in the private sector. At the 2014 Astana Economic Forum in May, the EBRD and the National Bank of Kazakhstan signed two agreements to enable the EBRD to source up to $1 billion in tenge from the National Bank to lend onward to Kazakh organisations.